Thursday, November 16, 2006

A Question We Can't Answer

Reader's Digest -- a company that is up to its ears in debt -- was just sold for $1.6 billion, almost the exact price paid for Youtube.


WTF?

7 Comments:

Carl said...

Well, there are few brands as instantly recognizable as Reader's Digest, and as an investor in Ripplewood, I have to admit they do some bang-up turnaround work. They revived Shinsei bank in Japan

2:37 PM  
Anonymous said...

I don't know all the details of RD, but they grossed 600M last year, likely have cash even with the debt, and they certainly have tangible assets.

Their paid circulation is over 10 million. Nothing to sneeze at.

8:59 AM  
Dave In Texas said...

Maybe someone really likes "Life In These United States."

9:00 AM  
tsfc said...

i distinctly remember hearing talk that they were considering hiring (or even briefly hired) caroline miller, the awesome ex-editor of New York mag (die, adam moss, die). that sez something.

9:41 AM  
tsfc said...

this was way back. like, after she left NY

9:41 AM  
the squad said...

We totally love Humor in Uniform. It's hilarious!!!

9:48 AM  
Carl said...

Anon,

Financials here.

I'm not familiar with the publishing industry, so I don't know how this stacks up, but on a gen eric basis, if current libilities exceed equity, you've got a problem on your hands, especially since the current ratio is under 1.0

Oddly enough, they have a good cash flow from operations (subject to further examination...I'd like to understand that "other adjustments" figure is all about), but debt service looks like it's killing them.

3:48 PM  

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